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Question 1

Favorable variances

A.

cannot occur when the Manufacturing Overhead account isused.
B.

have a debit balance.
C.

are generally closed to Work in Process.
D.

are associated with reductions in the expenses of thecompany.

2 points

Question 2

At Electrix, the standard price for the M640 electrical relay, acomponent used in the production of a commercial refrigerationunit, is $67. Standards call for two relays per refrigeration unit.In July, the company purchased 120 relays for $7,560. The companyused 104 relays in the production of 50 refrigeration units, withfour relays damaged in the installation process. The standardquantity of labor is 20 hours per refrigeration unit. The standardwage rate is $23. In July, the company incurred 1,020 labor hoursat a cost of $22,950. How much is the labor rate variance?

A.

$460 unfavorable.
B.

$460 favorable.
C.

$510 favorable.
D.

$50 favorable.

2 points

Question 3

At Briggs Company, the standard time required to assemble onetransmitter is 2.30 hours. The standard wage is $9.60 per hour.During June, employees at Briggs produced 860 transmitters andworked 1,935 labor hours at a total cost of $18,963. What isBriggs' labor rate variance?

A.

$395.60 unfavorable.
B.

$25.80 favorable.
C.

$1,677.00 unfavorable.
D.

$387.00 unfavorable.

2 points

Question 4

White Company manufactures a single product, the AZQR. Thestandards for materials for each unit have been set as 5 pounds ofKR-27 at a standard cost of $35.00 per pound. During May, thecompany purchased 500 pounds and used 512 pounds of KR-27 to make100 units of the AZQR. White paid $32.00 per pound for thematerial. What is the material price variance?

A.

$1,920 unfavorable.
B.

$1,500 favorable.
C.

$420 unfavorable.
D.

$1,080 favorable.

2 points

Question 5

The overhead volume variance indicates that

A.

management has done a poor job of controlling costs.
B.

raw materials have been wasted.
C.

the quantity of production differed from what wasanticipated.
D.

labor rates were higher than expected.

2 points

Question 6

Cringle Company expects sales as follows:

January

$100,000
February

$150,000
March

$180,000
April

$200,000


Sales are made 20% for cash, and 80% on credit. Credit sales arecollected 60% in the month of sale and 40% in the next month. Whatare cash collections for March?

A.

$168,000
B.

$170,400
C.

$36,000
D.

$180,000

2 points

Question 7

Right Wing Company's sales for the next three months are asfollows:

February

$130,000
March

$170,000
April

$200,000


Collection history for the company indicates that 60% of sales arecollected in the month of the sale, 36% is collected in thefollowing month, and 4% of sales are uncollectible.
How much are budgeted cash receipts for April?

A.

$181,200
B.

$120,000
C.

$186,400
D.

$222,000

2 points

Question 8

A flexible budget takes into account the fact that whenproduction levels change

A.

total fixed costs remain the same.
B.

variable costs per unit changes.
C.

fixed costs per unit remain the same.
D.

None of the above is true.

2 points

Question 9

Tech Star Company must maintain a minimum cash balance of$25,000. At the beginning of June the company's cash balance was$17,000. Budgeted cash receipts for June are $150,000 and budgetedcash disbursements are $201,000. Budgeted net income for Julytotals $11,000. During July, how much will Tech Star Company needto borrow?

A.

$43,000
B.

$59,000
C.

$9,000
D.

$34,000

2 points

Question 10

The formal documents that quantify a company's plans forachieving its goals are called

A.

variance reports.
B.

exception logs.
C.

cost of production reports.
D.

budgets.

2 points

Question 11

Which of the following would most likely be the present value ofa 5 year annuity of $5,000 per year (assuming a positive discountrate)?

A.

$5,000
B.

$18,000
C.

$25,000
D.

$2,000

2 points

Question 12

A $600,000 investment is expected to generate cash flows of$120,000 per year for each of the next six years. What is theinvestment's payback period?

A.

2.50 years.
B.

6.00 years.
C.

4.00 years.
D.

5.00 years.

2 points

Question 13

Maude Company's required rate of return on capital budgetingprojects is 9%. The company is considering an investment whichwould yield a cash flow of $12,000 per year for five years.Ignoring taxes, what is the most that the company would be willingto invest in this project?

A.

$38,994
B.

$60,000
C.

$46,674
D.

$55,046

2 points

Question 14

Melton Company's required rate of return on capital budgetingprojects is 16%. The company is considering an investment whichwould yield an after-tax cash flow of $30,000 in four years. Whatis the most that the company would be willing to invest in thisproject?

A.

$10,721
B.

$54,318
C.

$83,946
D.

$16,569

2 points

Question 15

A proposed project will cost $600,000 and will provide operatingcash flows of $150,000 in Year 1, $300,000 in Year 2, $500,000 inYear 3The company's hurdle rate is 15%. How much is the net presentvalue of the project?

A.

$23,013
B.

$66,373
C.

$86,020
D.

$50,000

2 points

Question 16

Red Rock Company sells a single product that has variable costsof $14 per unit. Fixed costs will remain constant across all levelsof sales shown.

Units Sold

Price per Unit

80,000

$35

90,000

$33

100,000

$31

110,000

$29

120,000

$27


What price should Red Rock charge to maximize profits?

A.

$33
B.

$29
C.

$31
D.

$27
E.

$35

2 points

Question 17

Core Manufacturing makes a single product. Budget informationregarding the current period is given below:

Revenue (100,000 units at $8.00)

$800,000
Direct materials

$170,000
Direct labor

125,000
Variable manufacturing overhead

235,000
Fixed manufacturing overhead

110,000

640,000
Net income

$160,000


Deer Company approaches Core with a special order for 15,000 unitsat a price of $8.50 per unit. Variable costs will be the same asthe current production and accepting the special order will nothave any impact on the rest of the company's orders. However, Coreis operating at capacity and will incur an additional $55,000 infixed manufacturing overhead if the order is accepted. What is theincremental income (loss) associated with accepting the specialorder?

A.

$48,000
B.

($7,000)
C.

$134,500
D.

($23,500)

2 points

Question 18

Jackson Company is trying to determine the optimal price tocharge for its PUNCH model. Jackson has fixed costs of $50,000 andthe PUNCH has variable costs of $12.00 per unit. Jackson hasdetermined that the following relationships exist between price anddemand:

Price

Demand

$20

6,875

$19

8,800

$18

10,000

$17

11,000


What is the contribution margin for a price of $20?

A.

$12.00
B.

$8.00
C.

$10.00
D.

$6.00

2 points

Question 19

Which is the proper order of steps in the target costingprocess?

A.

Analyze customer needs and wants, find the target cost, designthe product, determine the desired profit.
B.

Design the product, analyze customer needs and wants, determinethe desired profit, find the target cost.
C.

Analyze customer needs and wants, determine the desired profit,find the target cost, and design the product.
D.

Analyze customer needs and wants, determine the desired profit,design the product, find the target cost.

2 points

Question 20

As the price increases, the quantity demanded willgenerally:

A.

decrease.
B.

increase and then decrease.
C.

increase.
D.

stay the same.

2 points

Question 21

Wharton Company has the capacity to produce 50,000 units peryear. The company sells each unit for $125. Budgeted information isas follows:

Revenues

$5,612,000
Direct materials

$1,932,000
Direct labor

552,000
Manufacturing overhead (fixed)

276,000
Manufacturing overhead (variable)

552,000

3,312,000
Total

$2,300,000


A special order has been received for 5,000 units to be sold for$80 per unit. The company would incur an additional $60,000 intotal fixed costs in order to lease a special machine in order tomake a slight modification to the original product. Should thecompany accept the special order?

A.

Yes, the revenue will increase substantially.
B.

No, total costs would increase by $303,600.
C.

Yes, profit will increase by $36,400.
D.

No, accepting this order would decrease profits to$2,263,600.

2 points

Question 22

Billings Company sells one product with a variable cost of $4per unit. The company is unsure what price to charge in order tomaximize profits. The price charged will also affect the demand asshown below.

Units Sold

Price

20,000

$9

30,000

$8

35,000

$7

50,000

$6


If fixed costs are $100,000 and the chart represents the demand atvarious prices, what price should be charged in order to maximizeprofits?

A.

$7
B.

$8
C.

$9
D.

$6

2 points

Question 23

Most of the manufacturing costs for a product are determined inthe:

A.

design stage.
B.

preproduction stage.
C.

at maturity.
D.

during production.

2 points

Question 24

Which of the following are relevant in deciding whether toaccept or reject a special order?

A.

The impact the order will have on existing business.
B.

The price that will be charged on the special order.
C.

The incremental cost of filling the special order.
D.

All of the above.

2 points

Question 25

Which of the following statements about prices and profit istrue?

A.

Higher prices combine with lower demand to change the level ofprofits.
B.

Higher prices always lead to lower demand and lower profits.
C.

Higher prices will be offset by lower demand so profits willstay constant.
D.

Higher prices always lead to higher profits.

2 points

Question 26

Residual income is NOPAT with an adjustment for

A.

accounting distortions.
B.

profit required for the level of investment in the investmentcenter.
C.

standard cost variances.
D.

taxes and depreciation.

2 points

Question 27

Brooke Company had sales of $300,000 and NOPAT of $15,000. Thecompany's invested capital is $656,250. What is the company'sprofit margin as it relates to investment center performanceevaluation?

A.

45.7%
B.

5%
C.

48.0%
D.

2.3%

2 points

Question 28

Dot Company's Dental Division has invested capital of$1,200,000, sales of $3,600,000, net income of $70,000, and NOPATof $60,000. What is the division's turnover as it relates toinvestment center performance evaluation?

A.

5.00
B.

0.33
C.

1.67
D.

3.00

2 points

Question 29

The produce division of Boot Ship Nutrition had invested capitalof $800,000 last year. If the minimum required rate of return is15% and last year's residual income was $60,000, how much wasNOPAT?

A.

$60,000
B.

$120,000
C.

$400,000
D.

$180,000

2 points

Question 30

Goal congruence refers to the match between

A.

locations of manufacturing plants and customers.
B.

goals of the individual managers and those of the company as awhole.
C.

evaluations based on profits and those based on return oninvestment.
D.

number of units produced and number of units sold.

2 points

Question 31

The Banks Company prepares the statement of cash flows using theindirect method. The statement reported that cash provided byoperating activities for the year was $8,000. If the companyexperienced a $14,000 decrease in accounts receivable, a $13,000decrease in accounts payable, and a $4,000 decrease in inventoryduring the year, the company's net income(loss) must have been:

A.

$13,000
B.

$3,000
C.

$5,000
D.

($5,000)

2 points

Question 32

Warlace Company provided the following information from itsaccounting records during the year:

Acquired land by signing a loan

$ 150,000
Proceeds from issuing stock

90,000
Dividends paid to stockholders

55,000
Proceeds from sale of building

120,000
Purchases of inventories

45,000
Collections from customers

225,000
Payment of loan

50,000


How much is net cash provided (used) by financing activities?

A.

$35,000
B.

$435,000
C.

$135,000
D.

($15,000)

2 points

Question 33

When preparing the operating section of a statement of cashflows using the indirect method, various adjustments are needed.Which of the following adjustments is incorrectly stated?

A.

Add gains on sale of equipment.
B.

Deduct any increases in inventories from net income.
C.

Add to net income any increases in current liabilities.
D.

Add to net income depreciation and amortization expense.

2 points

Question 34

Cash flows related to long-term liabilities and stockholders'equity items are classified as:

A.

investing activities.
B.

financing activities
C.

operating activities.
D.

non-cash activities.

2 points

Question 35

Cash received from interest and dividends is classified on thestatement of cash flows as:

A.

financing cash outflows.
B.

financing cash inflows.
C.

investing cash inflows.
D.

operating cash inflows.

2 points

Question 36

Cash flows from investing activities include all of thefollowing, except:

A.

collections from long-term loans.
B.

collection of interest on a note receivable.
C.

proceeds from the sale of a building.
D.

investments in other companies' securities.

2 points

Question 37

Cash flows related to buying and selling long-term assets areclassified as:

A.

non-cash activities.
B.

investing activities.
C.

operating activities.
D.

financing activities.

2 points

Question 38

Cash flows relating to financing activities include:

A.

payment of principal on notes payable.
B.

payment of interest on notes payable.
C.

receipt of dividends from stock investments.
D.

making loans to other entities.

2 points

Question 39

Carte Company reported cost of goods sold for $100,000 anddepreciation expense totaling $7,000. On January 1, Carte hadinventory and accounts payable of $21,000 and $24,000,respectively. On December 31, inventory and accounts payable were$28,000 and $20,000, respectively. Net income is $60,000. Beginningaccounts receivable was $13,000 and ending was $12,000. How muchare the cash flows from operating activities using the indirectmethod?

A.

$57,000
B.

$77,000
C.

$50,000
D.

$65,000

2 points

Question 40

The Washington Company had the following results in 2012:

Account Balances

End of

Beginning of

Year

Year
Property, plant, and equipment

$358,000

$347,000
Accumulated depreciation

(256,000)

(220,000)
Net Property, plant, and equipment

$102,000

$127,000


During the year the company sold an asset which had an originalcost of $55,000 and accumulated depreciation of $31,000. How muchdepreciation expense for 2012 will be reported on the statement ofcash flows?

A.

$67,000
B.

Not enough information is provided.
C.

$36,000
D.

$5,000

2 points

Question 41

Which of the following would be included in the current ratiobut not the quick ratio?

A.

Inventory.
B.

Marketable securities.
C.

Cash.
D.

Accounts receivable.

2 points

Question 42

Asset turnover is

A.

net sales divided by total assets.
B.

earnings per share divided by market price per share.
C.

net sales divided by current assets.
D.

net income divided by sales.

2 points

Question 43

Cinema Theatre had a current ratio of 2.5 to 1 on December 31 ofthe current year. On that date, the company's assets were asfollows:

Cash

$ 100,000
Accounts receivable (net)

600,000
Inventory

960,000
Prepaid expenses

25,000
Equipment (net)

2,200,000
Total assets

3,885,000


What impact would collecting $55,000 due from customers have on itsinventory turnover ratio?

A.

Decrease.
B.

Not enough information is given.
C.

Increase.
D.

Stay the same.

2 points

Question 44

The ratio that measures the return earned on capitalindependently of how the firm is financed is the

A.

return on stockholders' equity.
B.

price earnings ratio.
C.

return on assets.
D.

earnings per share.

2 points

Question 45

Axilrode Company reported earnings per share of common stock $12in 2012 and paid dividends of $3 per share. The current marketprice per share is $102 and the book value per share is $54. Howmuch is the company's price-earnings ratio?

A.

$11.80
B.

$11.30
C.

$1.90
D.

$8.50

2 points

Question 46

Which is the most stringent test of a company's ability to meetits current obligations?

A.

Times interest earned.
B.

Debt-equity ratio.
C.

Current ratio.
D.

Quick ratio.

2 points

Question 47

Cost of goods sold in 2011 for the Cego Tire Company totaled$4,670,000. If gross profit was 64%, how much would sales be?

A.

$2,988,800
B.

$8,302,080
C.

$12,972,222
D.

$1,681,200

2 points

Question 48

Blackstone Company has total assets of $550,000 and owners'equity of $220,000, of which $65,000 of the equity is common stock.To which of the following is the company's debt-to-equity ratioclosest?

A.

0.60
B.

1.50
C.

5.08
D.

0.67

2 points

Question 49

Inventory turnover is

A.

sales divided by inventory.
B.

sales divided by accounts receivable.
C.

sales divided by cost of goods sold.
D.

cost of goods sold divided by inventory.

2 points

Question 50

Selling an old piece of machinery is a(n)

A.

financing activity.
B.

operating activity.
C.

investing activity.
D.

general activity.

2 points

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Related questions

Question 2

At Electrix, the standard price for the M640 electrical relay, acomponent used in the production of a commercial refrigerationunit, is $67. Standards call for two relays per refrigeration unit.In July, the company purchased 120 relays for $7,560. The companyused 104 relays in the production of 50 refrigeration units, withfour relays damaged in the installation process. The standardquantity of labor is 20 hours per refrigeration unit. The standardwage rate is $23. In July, the company incurred 1,020 labor hoursat a cost of $22,950. How much is the labor rate variance?

A.

$460 unfavorable.
B.

$460 favorable.
C.

$510 favorable.
D.

$50 favorable.

2 points

Question 3

At Briggs Company, the standard time required to assemble onetransmitter is 2.30 hours. The standard wage is $9.60 per hour.During June, employees at Briggs produced 860 transmitters andworked 1,935 labor hours at a total cost of $18,963. What isBriggs' labor rate variance?

A.

$395.60 unfavorable.
B.

$25.80 favorable.
C.

$1,677.00 unfavorable.
D.

$387.00 unfavorable.

2 points

Question 4

White Company manufactures a single product, the AZQR. Thestandards for materials for each unit have been set as 5 pounds ofKR-27 at a standard cost of $35.00 per pound. During May, thecompany purchased 500 pounds and used 512 pounds of KR-27 to make100 units of the AZQR. White paid $32.00 per pound for thematerial. What is the material price variance?

A.

$1,920 unfavorable.
B.

$1,500 favorable.
C.

$420 unfavorable.
D.

$1,080 favorable.

2 points

Question 5

The overhead volume variance indicates that

A.

management has done a poor job of controlling costs.
B.

raw materials have been wasted.
C.

the quantity of production differed from what wasanticipated.
D.

labor rates were higher than expected.

2 points

Question 6

Cringle Company expects sales as follows:

January

$100,000
February

$150,000
March

$180,000
April

$200,000


Sales are made 20% for cash, and 80% on credit. Credit sales arecollected 60% in the month of sale and 40% in the next month. Whatare cash collections for March?

A.

$168,000
B.

$170,400
C.

$36,000
D.

$180,000

2 points

Question 7

Right Wing Company's sales for the next three months are asfollows:

February

$130,000
March

$170,000
April

$200,000


Collection history for the company indicates that 60% of sales arecollected in the month of the sale, 36% is collected in thefollowing month, and 4% of sales are uncollectible.
How much are budgeted cash receipts for April?

A.

$181,200
B.

$120,000
C.

$186,400
D.

$222,000

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